High energy bills force a quarter of UK manufacturers abroad

One in four of Britain’s manufacturers has moved production abroad or is seriously considering it, according to research by Make UK, formerly the Engineering Employers' Federation.

The manufacturers’ lobby group said high energy costs have prompted this shift in production, with UK kilowatt-hour charges nearly double those in comparable industrialised countries. 

The survey also found that one in ten companies were outsourcing more production, especially to Southeast Asia, and a further 16% were considering it.

Make UK estimates the average British manufacturer pays around 27p per kilowatt-hour for electricity. It was around 16p for other developed nations, while in the United States, it was as low as 6p.

“A year ago, the big trend was onshoring and bringing back supply chains to the UK. Now companies can’t use UK suppliers because they’re too expensive, so they’re going overseas. We are seeing quite a flight from UK manufacturing because we’re uncompetitive,” said Stephen Phipson, chief executive of Make UK.

He pointed out that on top of the high kilowatt-hour charge, manufacturers also had to pay other levies, the most expensive of which was the climate charge, making them even less competitive than foreign rivals.

The government has introduced the British Industry Supercharger policy, allowing about 450 energy-intensive businesses relief from four of those levies and the British Industrial Competitiveness Scheme (BICS) that will provide relief to a further 10,000 companies on three of the levies, but not until 2027.

Make UK wants BICS to be introduced immediately and to all manufacturers.